Gregoire, who first won election as governor in a nail biter and then beat the same opponent four years later, said Monday she will not seek re-election and will focus on the state's economy for the final months in office.

To show her work wasn't done, the Democrat handed out energy drinks to her cabinet members.

"The worst thing that I can think of for the state of Washington is for me to be preoccupied with a campaign right now," she said. "I need to set my sights on the next 18 months and guarantee that we are out of this recession.

"I don't want to be distracted from that," she said.

Gregoire's announcement means Washington voters will face a fresh selection of candidates in 2012 after seeing two consecutive elections in which Gregoire and Republican Dino Rossi battled in competitive campaigns. Gregoire won the first race by 133 votes after two recounts and a court challenge in 2004.

The former attorney general was re-elected in 2008 with 53 percent of the vote.

Gregoire's past couple of years in office have been defined by her approach to dealing with the local effects of the national recession. She spent much of this year guiding budget negotiations between both parties and chambers as lawmakers sought to fill a $5 billion budget shortfall.

The final budget relied heavily on cuts to education and included double-digit annual increases in tuition.

Gregoire said Monday she's had the chance to do some amazing things her during decades in public service and her time as the state's chief executive.

"Now it's time for me to go on and do something else," she said at a news conference surrounded by family.

Gregoire said she has no plans after leaving office except to spend more time with her family. She said she will do everything she can to support the re-election of President Barack Obama, "but that doesn't mean I'm looking for a job."

Obama applauded Gregoire's years of service in a statement and said he will miss her "outstanding leadership."

The race to replace Gregoire is expected to be a competitive one.

Democratic U.S. Rep. Jay Inslee has been positioning himself to potentially run in her place. He said Monday he appreciated Gregoire's service during difficult economic times.

"Today is her day," said Inslee, who has served more than a decade in Congress representing northern Seattle suburbs. "I will make my intentions on the governor's race known shortly."

Attorney General Rob McKenna announced last week that he will seek the Republican nomination.